The Centre for the Promotion of Private Enterprise (CPPE) stated that liquidity challenges in the forex market contributed to Nigeria’s high inflation.
This is according to a report titled CPPE COMMENTS ON JANUARY 2022 INFLATION REPORT, signed by Its Chief Executive Officer, Dr Muda Yusuf.
He made recommendations to curb Nigeria’s high inflationary pressures, which continues to be a major worry to stakeholders in the Nigerian economy.
Nigeria’s inflation rate dropped marginally to 15.6% in January 2022, representing a reversal from the uptick recorded in the previous month, when it increased to 15.63% in December 2021.
CPPE stated that although the economy recorded a marginal decline in headline inflation in January, high inflationary pressures continue to be a major worry to stakeholders in the Nigeria economy.
What the CPPE is saying about Nigeria’s inflation
Mr Muda stated that the key driver of inflation is exchange rate depreciation which has a significant impact on headline inflation, especially the core sub-index. Also, liquidity challenges in the forex market affect access to manufacturing and other inputs amongst others.
The CPPE boss said to contain inflation, the federal government needs to manage insecurity, minimize fiscal policy deposit monetisation and establish an investment friendly tax climate.
“Government must also address concerns around high energy cost, reduce import duty on intermediate products and raw materials for industries to reduce production costs. They must also ensure the restoration of normalcy and good order at the nations ports to reduce transaction costs and manage climate change consequences to reduce flooding and desertification,” he said.
Some of these, he added, include exchange rate depreciation, liquidity issues, security concerns, climate change, expensive energy and transportation costs.
Others, he added, were structural impediments affecting agriculture value chain, monetisation of fiscal deficit, high import levies, exorbitant charges at the ports, and aggressive revenue drive by government agencies.
